U.S. hir­ing pull­back may sig­nal slow­down in growth

WASHINGTON >> U.S. job growth de­clined mod­estly in Novem­ber, a move that could sig­nal a slower but still steady pace of hir­ing and growth next year.

The po­ten­tial for a more ane­mic econ­omy con­trib­uted to a sharp drop in the stock mar­ket Fri­day, send­ing the Dow Jones av­er­age down 560 points, or 2.2%, by mar­ket close.

Yet most economists said last month’s job gain of 155,000 is more sus­tain­able than some of the larger in­creases posted ear­lier this year. And hir­ing at last month’s pace would make it eas­ier for the Fed­eral Re­serve to slow its in­ter­est rate in­creases, which in­vestors worry are weigh­ing on the econ­omy.

“This is the new Goldilocks,” said Josh Wright, chief econ­o­mist at iCIMS, a re­cruit­ing soft­ware com­pany. “Still strong-enough job growth, but a more cau­tious Fed.”

The un­em­ploy­ment rate stayed at 3.7 per­cent, a nearly five-decade low, for the third straight month, the La­bor Depart­ment said Fri­day in its monthly jobs re­port.

Still, the pan­icky fi­nan­cial mar­kets il­lus­trate how the views of Wall Street and most of the rest of the U.S. can dif­fer.

For most Amer­i­cans, jobs and in­comes are the most im­por­tant eco­nomic mea­sures. Av­er­age hourly earn­ings in­creased 3.1% in Novem­ber from a year ear­lier, Fri­day’s re­port said, only the sec­ond time they have climbed that much since the re­ces­sion ended nine years ago.

That’s boost­ing con­sumer con­fi­dence to nearly 18-year highs, spurring more spend­ing, and bol­ster­ing win­ter hol­i­day shop­ping. Amer­i­cans lifted their spend­ing in Oc­to­ber by the most in seven months.

“We’re still a lit­tle sur­prised to see such a grow­ing panic in mar­kets de­velop quite so soon given the rel­a­tively be­nign eco­nomic back­drop,” Paul Ash­worh, an econ­o­mist at Cap­i­tal Eco­nomics, said in a re­search note.

Yet for Wall Street, higher pay can crimp cor­po­rate profit mar­gins. Many large, pub­licly-traded com­pa­nies are hit by slower growth in places such as Europe and Ja­pan. They are also more di­rectly af­fected by tar­iffs that the Trump ad­min­is­tra­tion has im­posed on a range of im­ports.

“There is a dis­con­nect be­tween the gloom and doom en­vi­ron­ment in fi­nan­cial mar­kets and real eco-

Most an­a­lysts do ex­pect eco­nomic growth to de­cel­er­ate next year. The boost from the Trump ad­min­is­tra­tion’s tax cuts, im­ple­mented late last year, is ex­pected to fade. The Fed’s rate hikes could send bor­row­ing costs higher. And the Trump ad­min­is­tra­tion has im­posed tar­iffs on al­most half of all im­ports from China, which will re­main in place dur­ing a 90-day win­dow for ne­go­ti­a­tions an­nounced last week­end.

Those con­cerns have roiled fi­nan­cial mar­kets, send­ing ma­jor stock in­dexes down more than 4% this week. That’s the worst weekly de­cline since March.

Growth is fore­cast to slow to a still-solid 2% to 2.5% per­cent, an­a­lysts say, down from roughly 3% this year. Hir­ing will likely de­cline to about 150,000 a month from just above 200,000 this year, through Novem­ber.

“The econ­omy con­tin­ues to churn out new jobs and re­flects the strong un­der­ly­ing busi­ness con­di­tions that point to steady, al­beit slower job growth and eco­nomic ac­tiv­ity in 2019,” said Joe Brusue­las, chief econ­o­mist at con­sult­ing firm RSM.

Fed pol­i­cy­mak­ers are still likely to raise short­term in­ter­est rates at its meeting later this month, Brusue­las said. But Fri­day’s re­port sug­gests the Fed may not hike rates next year as rapidly as many in­vestors have feared.

The on­go­ing job gains are push­ing down un­em­ploy­ment rates to his­tor­i­cally low lev­els for a va­ri­ety of groups. The un­em­ploy­ment rate for men aged 20 and above fell last month to 3.3%, the low­est in 18 years. And the rate for Amer­i­cans with just high school diplo­mas dropped to 3.5%, the low­est since De­cem­ber 2000. The African-Amer­i­can job­less rate de­clined to 5.9%, match­ing May’s fig­ure as the low­est on record.

That’s mak­ing it more chal­leng­ing for busi­nesses to find the work­ers they need. Em­ploy­ers have posted 7 mil­lion open jobs, out­num­ber­ing the ranks of the un­em­ployed, which fell last month to just un­der 6 mil­lion.

Michael Mabry, chief op­er­at­ing of­fi­cer at Mooyah, a fast-causal burger chain mostly lo­cated in the South, says his com­pany has had to raise pay and of­fer more flex­i­ble sched­ul­ing to at­tract new work­ers. The com­pany plans to open 15 lo­ca­tions next year, which could cre­ate up to 450 new jobs.

Ap­pli­ca­tions have fallen “to an all-time low,” Mabry said.

“We’ve had to get com­pet­i­tive on work-life bal­ance,” Mabry said.

Nearly all employees make at least $10 an hour, and man­age­ment salaries have risen 5 to 10 per­cent in the past year, he added.

Na­tion­wide, hir­ing in Novem­ber was led by health care firms, which added 40,100 jobs, and man­u­fac­tur­ing com­pa­nies, which hired 27,000 new work­ers, the most in seven months and a sign that trade ten­sions have yet to weaken fac­tory hir­ing.